All four major banks now flag falling housing demand

By Vikram Singh · 2026-08-12

Profit up, pipeline down

Commonwealth Bank booked a net profit after tax of $10.866 billion for the full year ended 30 June 2026^[1], the largest annual result in the bank's history. The headline number looks solid, but the operating commentary buried inside the same result briefing told a different story about where the mortgage book is heading.

Chief Executive Matt Comyn said on 12 August that home loan application volumes had slid 15 per cent since May, with investor applications down 28 per cent since the budget was unveiled on 12 May.^[2] Comyn's written statement offered a careful read: "Housing activity has softened from a high base. Application volumes appear to have stabilised in recent weeks."^[6] Stabilised, not recovered.

Westpac's numbers are more precise

Westpac's ASX disclosure put average monthly mortgage applications at a pace of 27,000 a month since the May budget, down from 33,000 the prior quarter, a fall of roughly 18 per cent.^[3] Where CBA offered a percentage, Westpac gave the raw volumes, which makes its figure easier to interrogate. At average loan sizes around $600,000 to $650,000, the move from 33,000 to 27,000 applications a month represents several billion dollars of origination capacity leaving Westpac's pipeline every month.

The May budget introduced changes to property-related tax settings that appear to have knocked sentiment before the RBA even moved. The Reserve Bank held the cash rate at 4.35 per cent on 11 August, marking the end of its tightening cycle that began in early 2022.^[6]

What the price forecasts actually say

ANZ's property research unit has gone further than the other major banks in laying out a specific price trajectory. ANZ Associate Director for Property Daniel Gradwell said "Sydney and Melbourne housing prices are likely to fall about 8% this year".^[4] ANZ's Q3 commercial property update, published 27 July, also flagged a worst-case scenario of a 14.5 per cent Sydney decline, which would be the sharpest correction in that market since the post-pandemic unwind.

NAB cut its national dwelling price forecast to minus 5 per cent this week, reversing the 5 per cent rise it had published in its first-quarter housing sentiment release.^[5] Its application volumes tell the same story as its peers, with the bank flagging a 15 per cent fall.

The market data underneath the bank forecasts

Cotality's Home Value Index recorded sequential monthly falls of 0.1 per cent in April, 0.3 per cent in May and 0.4 per cent in June 2026, the largest monthly national price decline since December 2022. Three consecutive months of accelerating falls shifts the burden of proof onto the bulls.

Brisbane's residential auction clearance rate slid to 23.8 per cent in the first week of August. KPMG Economics is projecting a 1.1 per cent national price decline across 2026 before a 3.4 per cent recovery in 2027.

What to watch next

Three variables will determine whether the application slowdown is a temporary budget shock or the start of a genuine credit contraction. The spring selling season beginning in September typically lifts listing volumes and buyer activity, so a weak clearance rate through October would confirm that sentiment, not just supply, is the constraint. Any shift in RBA language toward rate cuts would immediately reprice fixed-rate expectations and likely pull forward demand that is currently sitting on the sideline.

ANZ's Q3 paper flagged investor activity was expected to fall 34 per cent, a contraction large enough to reshape pricing dynamics in inner-city unit markets that had only recently recovered. The record profit season and the falling application volumes are two readings from different points on the same timeline, and the gap between them is closing.

Vikram Singh

Vikram Singh writes about banking. He follows where money actually moves, from the strategy set in head office to what changes on a customer's phone.